Final answer:
A tax rate that remains constant for any given income level is called a proportional tax, applying the same rate to all income levels. The correct option is D.
Step-by-step explanation:
The tax rate that remains constant for any given income level is called a proportional tax. This type of tax, also known as a flat tax, applies the same tax rate across all income earners regardless of their level of income. As a result, someone earning $100,000 a year and someone earning $10,000 a year both pay the same percentage of their income in taxes.
While proportional taxes are simple and fair according to some because everyone pays the same rate, they can also be burdensome to lower-income individuals who would pay a larger proportion of their total resources compared to higher-income earners. On the other hand, progressive taxes increase the tax rate in accordance with the rise in the taxpayer's income, ensuring that those who earn more pay a higher percentage of their income in taxes, which can help to balance the relative tax burden among different income groups.
It’s important to understand these concepts for a firm grasp of fiscal policy and taxation. Each type of tax has its own implications for equity, budget deficits or surpluses, and fiscal policies aimed at combating recession or unemployment.